Those with Offset Home Loans - What's Your Cashflow / Process and Do You Have a Credit Card?

TwentyTwoCarats on 24/08/2023 - 14:52

I just refinanced my home loan to another bank that is giving me an offset account - HSBC.

Those with a offset home loan, what's your cashflow like? What I can imagine is that the simplest way for me would be:

Salary goes into offset
All tap purchases and online purchases from offset's debit card
Monthly payment gets taken out of offset
It is the end all be all account that will have all of my money pretty much.

However this seems a bit weird as a debit card will have access to all my money.
Secondly, I'm currently with Ubank for my transactional and savings account and they have push notifications for all money in and out, which HSBC does not.
Also, the HSBC Everyday Global account offers 2% cashback on all card tap purchases <$100 (and Apple Pay). But once again I don't really want to use HSBC as I love the notifications I get from Ubank.

Lastly, I've never had a credit card in my daily life. Literally only used the 28 degrees mastercard for travelling purposes because it works really well with all currencies. Should I get a credit card that gives me Velocity points? I wouldn't get Qantas because their flights are expensive AF all the time, Virgin is often semi-cheap, and Jetstar is usually cheapest but no cards give benefits for them.

Thoughts overall? Ideally I would like push notifications + 2% cashback + Velocity points (lmao) but of course you can't have it all.

Financial Credit Card Home Loan Loan

Comments

  • soan papdi on 24/08/2023 - 15:25

    Unless you sign up for bonus offers by churning multiple credit cards, it’s impossible to get 2% back from any card or scheme on an ongoing basis. Choose a points scheme and start churning if you want points. If not, just sti k to something g like colesMC and couple with offset for 2%

  • Gnilgorf on 24/08/2023 - 15:37
    +13

    Yes to having a CC.

    Generally speaking…

    Payslip -> Offset
    Bills, Groceries, Basically everything -> CC
    Offset -> CC Bill (Direct Debit automatically on due date).

    That way the extra funds sitting in the offset work a lil harder for a month or so before paying off the CC.

    • TwentyTwoCarats on 24/08/2023 - 16:02

      This sounds pretty simple. Which CC do you have and why?

      And I'm wondering is there a magical CC that is like the 28 degrees mastercard with travel benefits (no international fee and good currency exchange) and also gives points

      • happydude on 24/08/2023 - 16:21

        Commbank Ultimate has no currency conversion fee and free travel insurance. (It's Qantas points linked, but you can just use the standard awards program and not get qantas points.)

      • Gnilgorf on 24/08/2023 - 16:26
        +1

        Currently with ANZ Rewards~

        My home loans are also with ANZ, and the package (at the time) also covered the cost of the CC. With that being said, I managed to double dip by getting the home loan refinance bonus, as well as the bonus points that came with the CC sign up.

        It's been a couple of years, so I could churn a new card for points…but…life's too busy.

        Otherwise I find the extra points rewards from day to day spend rather negligible as the extra cost for the rewards programs generally offset any benefit one would gain. But everyone's milage may vary.

    • barge-in hunter on 25/08/2023 - 08:36

      I’ve always liked this idea - but most CCs have a much higher limit than I want to spend in a month.

      Do you find yourself watching the credit card bill mid month, to keep track of your household spending?

      At the moment, we do envelopes/accounts to budget (thanks Barefoot). No splurge left? Wait til next month… but I feel like we’re missing out on free points

      • Gnilgorf on 25/08/2023 - 10:08
        +2

        For the most part, I don't find myself watching the CC account. But i'm not one to frivolously spend on random things, despite what OZB tries to tempt me with.

        To go into more detail about limits, my card has a 6k limit. I used to have higher but found that I never went close to it, nor really needed it.
        Half the limit is generally taken up by last months expenditure, waiting to be paid off by the direct debit. So in reality, I only have half the limit to use each month, but even then I find its generally more than enough. Some months are expensive though (looking at Sept, March, May) due to multiple big bills aligning, but it all balances out after a while.

        At the end of the day, treat a CC like a debit card, and don't spend more than you have whether now or in the future.
        Find a card with a limit you are comfortable with and ignore the points. And pay off the CC bill in full and avoid the interest. That's the trap.

        And yes, still able to treat ourselves from time to time.

        • bobwokeup on 25/08/2023 - 11:04

          Yes this is exactly what we do. We see the points as a bonus, pay off in full and also churn CC.

  • Emilia on 24/08/2023 - 15:38
    +5

    Interest is calculated daily, so you want the money to stay in your offset the longest it possibly can. I have two credit cards. I pay it off about three days before it is due so I can maximise the money in my offset.

  • kipps on 24/08/2023 - 15:52
    +5

    Be careful chasing credit cards - subconsciously they result in a lot of people spending more cash. Yes they get points and reduce interest expense on home loan but that benefit is negated if you spend more.

    • TwentyTwoCarats on 24/08/2023 - 15:53
      +1

      Agreed. This is the reason I stuck by my principles and never opened a credit card (apart from 28 degs for travelling).
      Because I never wanted to borrow money when I didn't need to borrow money in the first place.

      However now I'm just thinking whether I've been missing out on flight points all these years - that's all.

      • happydude on 24/08/2023 - 16:04

        Make your credit card limit pretty much the same as your monthly salary.

        Put everything on the credit card. EVERYTHING. Then you never get into trouble as your salary is always enough to pay off the credit card each month and you start again.

        Spending a little from an account here and a little from the account over there makes it very hard to keep track of your expenditure. That is how you get into debt. This is my process.

    • seanfoite on 24/08/2023 - 16:00
      +3

      Well said. People never talk about this when it comes to the benefits of credit cards. If you overspend as a result of it being on credit, then it completely negates any marginal benefit you get from points or the offset interest saving.

      • Nav2k on 24/08/2023 - 16:55

        Agree. The psychology of "tap and pay" with a credit card vs using eg. a redraw facility…I think twice about tapping now with a debit vs having credit cards (paid off each month) knowing my home loan interest is going up each time i tap. Do I really need that coffee?

        Studies have shown that people tend to spend less paying on debit than credit.

        The points are rubbish too. Better off churning cards. Spend like a squillion dollars to get one economy flight Melbourne to Sydney and pay almost the same price in taxes anyway.

  • brandt on 24/08/2023 - 15:54

    I have a credit card with the same bank as my offset account. The offset account has a low transfer and withdrawal limit of $1000. The debit cards are stored at home and I only use credit cards to pay. All cash withdrawals are done via bank's app cardless cash.

  • CodeXD on 24/08/2023 - 16:02

    Jetstar is usually cheapest but no cards give benefits for them

    I use QFF points for jetstar

  • DingoBilly on 24/08/2023 - 16:12

    I do the same as yourself OP except I use a credit card for all my groceries and spending for extra 30 or so days of not paying interest on the amount. And I churn credit cards for QFF points which I then sell for cash as I think that's the best return in most cases if you're not flying a lot (business class upgrades are a waste of money IMO). Can usually make about $2000 at least per year from selling points which is a nice bonus.

    Don't have any cards linked directly to my offset account just for security purposes.

    • TwentyTwoCarats on 24/08/2023 - 16:14

      Where do you sell points for cash? Just on sites like this?

      • djkelly69 on 24/08/2023 - 16:51
        +2

        Just noting that selling FF points is against the T&Cs of both Velocity and QFF, and your account can be closed and/or points forfeited if caught.

        There is also some risk of being scammed by a buyer or seller.

  • howtocreditcardchurn on 25/08/2023 - 09:57
    +1

    I have a home loan with CBA with offset and a credit card with them as well which is free under their wealth package.

    All our family earnings go straight to offset, including all dividends if not reinvested. I spend everything that is possible on the credit cards I churn which is not my commbank CC. I don’t do this for interest or to gain points from spending, as those benefits are minimal. I do this to reach the minimum spend for signup bonuses, because that’s where their real value comes from. The rest is just a bonus.
    I only use my commbank CC in between, when cancelling and applying for a new credit card to churn which I do every 2 months or so.

    I treat my credit cards as if it was a debit card or cash and have them paid of every statement period if full.

    This way you get all the benefits of credit cards to their fullest and benefits of the offset account to its fullest. Maximising points and interest.

  • N1NJ4A on 25/08/2023 - 11:20

    If you're just after cashflow, you should get a no fee or low fee credit card and make all your payments from the credit card, then pay-off your CC by due date each month, but unless its no fee or the fee is lower than the interest you save each month, its not worth the hassle.

    The reward CCs probably best option with a churn to get the bonus points. Often, you can recover the annual fee with other benefits availabke as well beyond just the bonus points.

    Also, you can use QANTAS points to get Jetstar flights, though I don't find them value for money. You're better off using qantas points for reward flights instead.

  • crider on 26/08/2023 - 18:39

    Use a Credit Card not a Debit Card.
    Credit Cards offer more protection than Debit Cards.
    Use 55 Days Interest Free periods.
    Align Credit Card Due Date to be a few days prior to receiving your Salary.
    Use a cheap Credit Card, no fees, no rewards.
    Get available credit equal to 3x months expenses, the billing cycle will use 2/3 prior to due date, the remaining 1/3 is for emergencies.

  • fishandchipss on 14/10/2023 - 15:16

    Can i possibly tap on someone's knowledge as im quite confused with the advantage of an off set account. Does the amount deducted monthly decrease when you put more money into your offset? Considering its a lower interest amount on the principal loan?

    • ol mate on 14/10/2023 - 16:42

      Interest is calculated daily on the net owing amount. Money in an offset essentially is "earning" interest at your home loan's interest rate (as well as a tax advantage, as the money saved isn't taxed, but interest income is)

      E.g. $100k balance on the loan, $20k in offset. Interest is calculated on the $80k instead of the $100k balance.

  • MrrMagic on 17/10/2023 - 12:45

    Leave everything in offet, get promo credit cards with interest free periods, buy coles mastercards, pay for everything with them.

    Balance transfer credit cards for better interest free periods.

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